Key Petroleum Strikes Oil in the Onshore Canning Basin

Key Petroleum revealed Monday that it has encountered oil shows across a 141 foot interval at its Cyrene-1 exploration well in the onshore Canning Basin, Western Australia.

The oil shows were observed in the lower Grant and Goldwyer Formations from 3,002 feet to 3,143 feet, and are indicative of an active source rock believed to have unconventional oil or gas potential. Interbedded limestones were observed in the cuttings of the Goldwyer Formation.

DCA, which is drilling the well with Rig 7, has conducted a wiper trip and is completing testing of blowout preventers prior to running in the hole with the core barrel to begin coring a 177 foot section of the Goldwyer Formation shale that is believed to exhibit the best total organic content.

The top Goldwyer Formation intersected at 3,012 feet, the same depth encountered at the Hedonia-1 well.

"Hedonia-1, located on an anticlinal feature, lost circulation of its drilling fluids upon drilling into the top the Ordovician-aged Willara limestones. This severe lost circulation indicates high permeability in the reservoir where a significant gas show was recorded," Key said in a statement on its website.

Key noted that the Ordovician-aged Willara limestones is "an exciting reservoir"; a formation that was never properly tested. The testing program on Hedonia-1 well was terminated prematurely due to weather.

Cyrene-1 is being drilled through a 443 foot section within Goldwyer Formation shales to assess its potential as for unconventional hydrocarbons, before drilling through the conventional Willara Formation that is estimated to host 5 million barrels of oil.

The well has a planned total depth of 3,478 feet.

The Goldwyer shale contains some 764 trillion cubic feet (tcf) of risked gas in place and 229 tcf of risked recoverable gas, the largest estimate for any basin in Australia, according an April 2011 report by the U.S. Energy Information Administration on world shale gas resources.



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